12. Giving reason, dintinguish between the
behaviour of demand curves of firms under
perfect competion and monopolistic compe
tition.
Answers
Answer:The principal difference between these two is that in the case of perfect competition the firms are price takers, whereas in monopolistic competition the firms are price makers. Perfect competition is not realistic, it is a hypothetical situation, on the other hand, monopolistic competition is a practical scenario.
Difference: perfect competition- 1]Homogeneous products are sold. 2]perfect knowledge about market.3]No existence of selling cost.
Monopolistic-1]Different products.2]some knowledge about market.3]No selling cost.
Explanation:the difference is that with perfect competition, all firms are price-takers. ... So we're dealing with a perfectly elastic demand curve where the price = MR = AR. However, with monopolistic competition, firms are not price-takers! And that means that price is not equal to MR and not equal to AR.
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